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<p>This paper investigates the impact of China’s <i>Fang Guan Fu</i> reform to the tax system on entrepreneurship. Implemented by the State Taxation Administration, this reform aims to decentralize administrative authority, enhance regulatory efficiency, and improve service quality for businesses. Leveraging the reform as a quasi-experiment, we find that it significantly promotes entrepreneurship by reducing tax burdens, lowering institutional transaction costs, and promoting tax fairness. Additionally, the positive effects on entrepreneurship are particularly pronounced in regions with high levels of government intervention, tax dependency, financial development, and digitalization, as well as in industries with high tax burdens and high monopoly levels. These findings underscore the importance of tax policy in removing institutional barriers and fostering a more conducive environment for entrepreneurship.</p>

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Ease of Doing Business and Entrepreneurship: Evidence from a Tax Administration Reform in China

  • 期刊论文

  • 发表日期：

    2026年4月17日

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  • Hongyu Pan,
  • Yanan Wang,
  • Yue Zhang

摘要

This paper investigates the impact of China’s Fang Guan Fu reform to the tax system on entrepreneurship. Implemented by the State Taxation Administration, this reform aims to decentralize administrative authority, enhance regulatory efficiency, and improve service quality for businesses. Leveraging the reform as a quasi-experiment, we find that it significantly promotes entrepreneurship by reducing tax burdens, lowering institutional transaction costs, and promoting tax fairness. Additionally, the positive effects on entrepreneurship are particularly pronounced in regions with high levels of government intervention, tax dependency, financial development, and digitalization, as well as in industries with high tax burdens and high monopoly levels. These findings underscore the importance of tax policy in removing institutional barriers and fostering a more conducive environment for entrepreneurship.